Former type Brokerage House Number of employees 1,300 Founder Jordan Belfort Area served United States of America | Defunct December 1996 Revenue 3 billion USD (total) Ceased operations December 1996 | |
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Industry Investment banking, stock exchange Key people Jordan Belfort (CEO), Andrew Greene, Steven P. Sanders.
Danny Porush (Chairman and President) Founded 1989, Long Island, New York, United States Headquarters Lake Success, New York, United States, United States of America, Long Island, New York, United States, New York, United States | ||
Stratton Oakmont, Inc. was a Long Island, New York, "over-the-counter" brokerage house founded by Jordan Belfort. It defrauded many shareholders leading to the arrest and incarceration of several executives, and the closing of the firm.
Contents
History
Jordan Belfort founded the firm of Stratton Oakmont in the late 1980s with Danny Porush. Earlier, Belfort opened a franchise of Stratton Securities, a minor league broker-dealer, and then bought out the entire firm. Stratton Oakmont was the largest OTC firm in the country during the late 1980s and 1990s. The firm was responsible for the initial public offering of 35 companies, including Steve Madden Ltd. Stratton Oakmont did not have a product control function to verify prices of its positions and monitor trading activity.
Stratton Oakmont participated in pump-and-dump schemes, a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" their overvalued shares, the price falls and investors lose their money. Stratton Oakmont would also try to maintain the price of a stock by refusing to accept or process orders to sell the stock. Stocks that are the subject of pump and dump schemes are sometimes called "chop stocks".
In 1995, the firm sued Prodigy Services Co. for libel in a New York court, in a case that had wide legal implications.
The firm was the subject of numerous disciplinary actions brought by the NASD beginning in 1989. The firm was shut down in December 1996, and in 1999 Belfort and Porush were indicted for securities fraud and money laundering.
Belfort and Porush later pleaded guilty to ten counts of securities fraud and money laundering, admitting that for seven years they operated a scheme in which they manipulated the stock of at least 34 companies. As part of their plea deal, they received less prison time, and cooperated with prosecutors in their investigations of other brokerage houses.
In popular culture
The 2013 movie The Wolf of Wall Street is a drama based on the memoirs of Jordan Belfort, directed by Martin Scorsese. Leonardo DiCaprio stars as Jordan Belfort and Jonah Hill plays fictional character Donnie Azoff, who is loosely based on Danny Porush.